Tax board should rein itself in – while it still can, controller says

State Controller Betty Yee, at a Dec. 14, 2016 Board of Equalization meeting, said elected tax board members are using public employees to promote themselves in their districts.

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State Controller Betty Yee, at a Dec. 14, 2016 Board of Equalization meeting, said elected tax board members are using public employees to promote themselves in their districts.

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The longest-serving member of California’s embattled tax board is asking her colleagues to rein in their powers before the Legislature does it for them.

State Controller Betty Yee on Monday released a proposal that would block elected members of the Board of Equalization from circumventing their executive director and ban them from accepting bundled campaign contributions from companies that have business before the board.

She developed the proposal after a March audit by the Department of Finance said elected members on the tax board had improperly “intervened” in staff activities, creating inconsistencies and potentially violating state law.

It highlighted events with questionable ties to the tax board’s mission, such as women empowerment programs that featured motivational speakers. It also said elected members had swelled their political staff by “redirecting” civil servants from their normal jobs.

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“Clearly, a governance policy is urgently needed to create board member oversight, accountability and efficiency,” Yee said in a written statement.

Her proposal is one of three that the Board of Equalization, which collects $60 billion in taxes annually, is scheduled to consider at its next meeting to address different aspects of the audit.

Board Chairwoman Diane Harkey has a series of questions she’s asking her colleagues to consider, such as how to disclose meetings that board members have with businesses and which Board of Equalization employees should report to the elected members.

Board member Jerome Horton has similar questions he’d like the board to debate. His recommendations include adopting a vacancy-reduction plan and centralizing some of the taxpayer education programs that auditors recently scrutinized.

Yee was first elected to the board in 2006 and now serves on it as controller. The board has four other members who are elected by district.

In late March, Yee also aired a proposal to strip the agency of much of its authority. That plan called on Gov. Jerry Brown to create a new tax-collecting department called the Department of Revenue, and to shift much of the Board of Equalization’s portfolio to that entity. Yee has discussed that proposal with lawmakers and with the Governor’s Office, her spokeswoman said.

Brown last month suspended the tax board’s ability to hire or make large purchases. He also asked lawmakers to come up with a plan to address the audit by next month. The Legislature has not yet disclosed a proposal.

Lawmakers at an April hearing said they were surprised to find in the audit that staff for the board’s elected members communicated with civil servants without first informing the agency’s executive director. Sen. Steve Glazer, D-Orinda, said at the hearing that kind of activity is unusual among the state’s elected organizations, and often leads to some kind of discipline.

Yee’s internal reform proposal also would:

▪ Require the Board of Equalization to give its executive director an annual performance review. That has not been the board’s practice.

▪ Allow board members to discipline each other for inappropriate conduct.

▪ Compel board members to return campaign contributions if they receive bundled donations worth more than $250 from a company that brings a question before the elected body.

At an April 6, 2017 Assembly budget hearing, Phil Ting of San Francisco said he had "zero faith" that California's Board of Equalization can correct misuses of public resources that a recent audit identified.

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